{"id":55420,"date":"2024-02-02T11:28:21","date_gmt":"2024-02-02T11:28:21","guid":{"rendered":"https:\/\/news.pakistaninewspaperlist.com\/job-98pc-done-caretaker-govt-seals-plan-to-sell-national-carrier\/"},"modified":"2024-02-02T11:28:21","modified_gmt":"2024-02-02T11:28:21","slug":"job-98pc-done-caretaker-govt-seals-plan-to-sell-national-carrier","status":"publish","type":"post","link":"https:\/\/pakistaninewspaperlist.com\/news\/job-98pc-done-caretaker-govt-seals-plan-to-sell-national-carrier\/","title":{"rendered":"\u2018Job 98pc done\u2019: Caretaker govt seals plan to sell national carrier"},"content":{"rendered":"<p><\/p>\n<div dir=\"auto\">\n<p>The caretaker government is making binding plans for the new set-up to sell loss-making Pakistan International Airlines (PIA), according to the privatisation minister and other officials.<\/p>\n<p>In the past, elected governments have shied away from undertaking unpopular reforms, including the sale of the flag carrier. But Pakistan, in deep economic crisis, agreed in June to overhaul loss-making state-owned enterprises under a deal with the International Monetary Fund (IMF) for a <a href=\"https:\/\/www.dawn.com\/news\/1762360\">$3 billion<\/a> bailout.<\/p>\n<p>The government <a href=\"https:\/\/www.dawn.com\/news\/1768999\">decided<\/a> to privatise PIA just weeks after signing the IMF agreement.<\/p>\n<figure class=\"media  sm:w-1\/2  w-full  media--right  media--embed  media--uneven\">\n<p>    <iframe class=\"nk-iframe\" onload=\"setInterval(()=&gt;{try{this.style.height=this.contentWindow.document.body.scrollHeight+'px';}catch{}}, 100)\" width=\"100%\" frameborder=\"0\" scrolling=\"no\" style=\"height:400px;position:relative\" src=\"https:\/\/www.dawn.com\/news\/card\/1776844\" sandbox=\"allow-same-origin allow-scripts allow-popups allow-modals allow-forms\"><\/iframe><\/p>\n<\/figure>\n<p>The caretaker administration, which took office in August to oversee the Feb 8 election, was <a href=\"https:\/\/www.dawn.com\/news\/1767041\">empowered<\/a> by the outgoing Parliament to take any steps needed to meet the budgetary targets agreed with the IMF.<\/p>\n<p>\u201cOur job is 98 per cent done,\u201d Privatisation Minister Fawad Hasan Fawad told <em>Reuters<\/em> when asked about the plan to sell the airline. \u201cThe remaining 2pc is just to bring it on an excel sheet after the cabinet approves it.\u201d<\/p>\n<p>Fawad said the plan, drawn up by transaction adviser Ernst &amp; Young, will be presented to the federal cabinet for approval before the tenure of the administration ends following the election.<\/p>\n<p>The cabinet will also decide whether to sell the stake by tender or through a government-to-government deal, Fawad said.<\/p>\n<p>\u201cWhat we have done in just four months is what past governments have been trying to do for over a decade,\u201d Fawad said. \u201cThere is no looking back,\u201d he said.<\/p>\n<p>Details of the privatisation process have not been previously reported.<\/p>\n<p>PIA had liabilities of Rs785bn ($2.81bn) and accumulated losses of Rs713bn as of June last year. Its CEO has said losses in 2023 were likely to be Rs112bn.<\/p>\n<p>Progress on the privatisation will be a key issue if the next government goes back to the IMF once the current bailout programme expires in March.<\/p>\n<figure class=\"media  sm:w-1\/2  w-full  media--right  media--embed  media--uneven\">\n<p>    <iframe class=\"nk-iframe\" onload=\"setInterval(()=&gt;{try{this.style.height=this.contentWindow.document.body.scrollHeight+'px';}catch{}}, 100)\" width=\"100%\" frameborder=\"0\" scrolling=\"no\" style=\"height:400px;position:relative\" src=\"https:\/\/www.dawn.com\/news\/card\/1783263\" sandbox=\"allow-same-origin allow-scripts allow-popups allow-modals allow-forms\"><\/iframe><\/p>\n<\/figure>\n<p>Caretaker Finance Minister Shamshad Akhtar <a href=\"https:\/\/www.dawn.com\/news\/1790037\">told reporters<\/a> last year that Pakistan would have to remain in IMF programmes after the expiry.<\/p>\n<p>Two sources close to the process told <em>Reuters<\/em> that a 51pc stake with full management control would be offered to buyers after parking the airline\u2019s debts in a separate entity, under the 1,100 page report from Ernst &amp; Young.<\/p>\n<p><em>Reuters<\/em> could not independently confirm the contents of the report. Fawad did not give specific details of the size of the stake to be sold, but confirmed the plan involved the carrier\u2019s debts being spun off into a separate entity.<\/p>\n<p>Ernst &amp; Young did not respond to requests for comment.<\/p>\n<p>PIA spokesman Abdullah Hafeez Khan said the airline was assisting the privatisation process, extending \u201cfull cooperation\u201d to the transaction adviser.<\/p>\n<h2><a id=\"fast-tracked\" href=\"#fast-tracked\" class=\"heading-permalink\" aria-hidden=\"true\" title=\"Permalink\"\/>Fast-tracked<\/h2>\n<p>Ishaq Dar, who has previously served as the finance minister previously and has been named by the PML-N to retain the portfolio if it forms the next government, told <em>Reuters<\/em> that the sale of PIA will be fast-tracked.<\/p>\n<figure class=\"media  sm:w-1\/2  w-full  media--right  media--embed  media--uneven\">\n<p>    <iframe class=\"nk-iframe\" onload=\"setInterval(()=&gt;{try{this.style.height=this.contentWindow.document.body.scrollHeight+'px';}catch{}}, 100)\" width=\"100%\" frameborder=\"0\" scrolling=\"no\" style=\"height:400px;position:relative\" src=\"https:\/\/www.dawn.com\/news\/card\/1804601\" sandbox=\"allow-same-origin allow-scripts allow-popups allow-modals allow-forms\"><\/iframe><\/p>\n<\/figure>\n<p>\u201cIt will, God willing, move ahead with fast speed,\u201d he said.<\/p>\n<p>In a <a rel=\"noopener noreferrer\" target=\"_blank\" class=\"link--external\" href=\"https:\/\/www.imf.org\/en\/Publications\/CR\/Issues\/2024\/01\/19\/Pakistan-First-Review-Under-the-Stand-by-Arrangement-Requests-for-Waivers-of-Applicability-543909\">report<\/a> in mid-January, the IMF expressed satisfaction over the measures initiated by the caretaker government to accelerate reforms of state-owned enterprises, specifically mentioning the amendment of the PIA privatisation law.<\/p>\n<p>Under the privatisation plan submitted by Ernst &amp; Young to the government on Dec 27, government-guaranteed legacy debt and payables \u2014 which are held by a consortium of seven domestic banks \u2014 will be parked in a holding company, Fawad and two sources involved in the process said.<\/p>\n<p>Fawad said the government and the consortium had an agreement in place regarding the settlement of the legacy debt, which includes negative equity of Rs825bn in loans, creditors\u2019 money and the losses. He provided no further details.<\/p>\n<p>The sources had earlier said the banks wanted a five-year bond issued against the debt with a 16.5pc coupon on the paper, while the finance ministry was offering only 10pc.<\/p>\n<p>The banks have not commented on the deal.<\/p>\n<p>Besides its losses and debt, PIA\u2019s governance and safety standards have been questioned by global aviation authorities for some years.<\/p>\n<p>In early 2020, Czech and Hungarian air force jets were scrambled to intercept a PIA flight with 300 people on board as it went astray due to an \u201cavoidable human error\u201d by its pilot, according to a previously unreported confidential report by a PIA inquiry board, which was reviewed by <em>Reuters<\/em>.<\/p>\n<p>In May that year, the <a href=\"https:\/\/www.dawn.com\/news\/1558944\">crash<\/a> of a PIA plane in Karachi killed nearly 100 people and a fake pilot licence scandal erupted later in 2020.<\/p>\n<p>The scandal led to the European Union Aviation Safety Agency (EASA) <a href=\"https:\/\/www.dawn.com\/news\/1566153\">banning<\/a> the national carrier from flying to its most lucrative routes in Europe and the UK.<\/p>\n<p>The 2020 ban is still in place and has cost the airline nearly Rs40bn in revenue annually, according to government records presented in parliament.<\/p>\n<p>The airline has been pleading with EASA to lift the ban even provisionally, but to no avail, according to correspondence between it and PIA reviewed by <em>Reuters<\/em>.<\/p>\n<p>The financial crisis has also led to <a href=\"https:\/\/www.dawn.com\/news\/1775259\">seizure<\/a> of PIA aircraft by creditors in recent months, according to the airline. One aircraft was taken at Kuala Lumpur airport for non-payment of lease fees, and another in Toronto for non-payment of ground handling, PIA said.<\/p>\n<figure class=\"media  sm:w-1\/2  w-full  media--right  media--embed  media--uneven\">\n<p>    <iframe class=\"nk-iframe\" onload=\"setInterval(()=&gt;{try{this.style.height=this.contentWindow.document.body.scrollHeight+'px';}catch{}}, 100)\" width=\"100%\" frameborder=\"0\" scrolling=\"no\" style=\"height:400px;position:relative\" src=\"https:\/\/www.dawn.com\/news\/card\/1775711\" sandbox=\"allow-same-origin allow-scripts allow-popups allow-modals allow-forms\"><\/iframe><\/p>\n<\/figure>\n<p>While the airline awaits the government\u2019s decision on a sale, it continues to need financial support: Rs23.7bn are required to keep it afloat for another five to six months before control is given to a new buyer, three government and PIA sources said.<\/p>\n<h2><a id=\"challenging-sale\" href=\"#challenging-sale\" class=\"heading-permalink\" aria-hidden=\"true\" title=\"Permalink\"\/>Challenging sale<\/h2>\n<p>Not everyone agrees with pressing ahead speedily with the sale.<\/p>\n<p>Three senior airline officials who spoke to <em>Reuters<\/em> on condition of anonymity said a fast sale could devalue the airline\u2019s worth, and that it would not be a transparent transaction without due diligence.<\/p>\n<figure class=\"media  sm:w-1\/2  w-full  media--right  media--embed  media--uneven\">\n<p>    <iframe class=\"nk-iframe\" onload=\"setInterval(()=&gt;{try{this.style.height=this.contentWindow.document.body.scrollHeight+'px';}catch{}}, 100)\" width=\"100%\" frameborder=\"0\" scrolling=\"no\" style=\"height:400px;position:relative\" src=\"https:\/\/www.dawn.com\/news\/card\/1785702\" sandbox=\"allow-same-origin allow-scripts allow-popups allow-modals allow-forms\"><\/iframe><\/p>\n<\/figure>\n<p>\u201cWe are not against its privatisation, and all we want is that you don\u2019t just throw it away,\u201d said one of the officials.<\/p>\n<p>But Singapore-based aviation analyst Brendan Sobie said PIA is in dire straits: the plan submitted to the government was \u201cessentially the only option to save the airline\u201d.<\/p>\n<p>\u201cThe privatisation will be challenging and a sale is likely not possible unless it first undergoes a deep restructuring and the debts are cleared,\u201d he said.<\/p>\n<p>PIA\u2019s assets include key slots at the world\u2019s busiest airports and air routes to top European destinations, the Middle East and North America.<\/p>\n<p>PIA has air service agreements with more than 150 countries and generates about Rs280bn annually in revenues despite the EU ban, airline records show.<\/p>\n<p>It has 10 slots at Heathrow, which, according to two PIA officials, are currently worth Rs70bn annually. It has a further nine slots at Manchester and four at Birmingham.<\/p>\n<p>Turkish and Kuwaiti airlines have been operating 70pc of the slots under a business arrangement with PIA that also allows the airline to retain them, the PIA officials said.<\/p>\n<p>Separately, PIA\u2019s physical assets, which include aircraft, hotels in Paris and New York and other properties, are worth Rs105.6bn ($375 million) as per book value, according to the airline\u2019s annual report for 2023.<\/p>\n<p>PIA officials, however, said the market value of the assets could be above $1bn. In any case, the hotels and other properties would not be up for sale, they said.<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The caretaker government is making binding plans for the new set-up to sell loss-making Pakistan International Airlines (PIA), according to the privatisation minister and other officials. In the past, elected governments have shied away from undertaking unpopular reforms, including the sale of the flag carrier. But Pakistan, in deep economic crisis, agreed in June to [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":55421,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/i.dawn.com\/large\/2024\/02\/02135654c96df3b.jpg?r=140721","fifu_image_alt":"","footnotes":""},"categories":[192],"tags":[],"class_list":["post-55420","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-islamabad-news"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/pakistaninewspaperlist.com\/news\/wp-json\/wp\/v2\/posts\/55420","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pakistaninewspaperlist.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/pakistaninewspaperlist.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/pakistaninewspaperlist.com\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/pakistaninewspaperlist.com\/news\/wp-json\/wp\/v2\/comments?post=55420"}],"version-history":[{"count":0,"href":"https:\/\/pakistaninewspaperlist.com\/news\/wp-json\/wp\/v2\/posts\/55420\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/pakistaninewspaperlist.com\/news\/wp-json\/wp\/v2\/media\/55421"}],"wp:attachment":[{"href":"https:\/\/pakistaninewspaperlist.com\/news\/wp-json\/wp\/v2\/media?parent=55420"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/pakistaninewspaperlist.com\/news\/wp-json\/wp\/v2\/categories?post=55420"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pakistaninewspaperlist.com\/news\/wp-json\/wp\/v2\/tags?post=55420"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}